If you’re over 50 and getting a divorce, you are not alone. The “Gray Divorce” phenomena refers to the increasing number of people who divorce later in life.
Twenty years ago, 10% of divorces involved people over 50. Today, that number is up to 25% per Dr. Susan Brown, Bowling Green State University sociology professor and co-author of The Gray Divorce Revolution.
There’s less social stigma associated with gray divorce, even after a very long marriage, so don’t impose it on yourself.
You don’t need that extra stressor. Divorce can feel like you’ve been handed a puzzle with no picture on the box. You’re dealing with enough already, and this includes uncertainties about your financial future, living situation, and personal life.
While you may not have a choice about getting a divorce, you can choose your process. The Collaborative Divorce process is a way for you and your spouse to avoid the stereotypical nasty and expensive litigated divorce. In a Collaborative Divorce, each of you hire your own lawyer, and you sign a binding agreement that the collaborative divorce lawyers cannot litigate the case. In other words, so long as you are in a collaborative divorce, the case is resolved through information sharing and working collaboratively to reach a resolution.
The collaborative divorce process is a productive forum in which to explore the following common issues in Gray Divorces:
1. The House
There’s a lot of emotion tied to the house. It’s important to make a reasoned decision about it. Should it be sold? If so, can the tax basis be transferred, and to which spouse? Can one spouse afford to keep the house? Will renting it out make it more likely? What are the tax consequences and other costs associated with these options?
2. Spousal Support
Maintaining two separate households costs more than maintaining one. Naturally, there’s concern about how much money is available to support each party. With the help of a jointly hired financial professional, all the issues can be explored, including the parties’ respective living expenses and their individual future financial planning. Various items related to support are explored, including the effects of complex compensation and bonus structures, stock options and restricted stock units. Social security alternatives (exercising your own or your spouse’s derivative benefits) are also considered.
3. Brokerage accounts and retirement plans
These assets are typically a couple’s most valuable assets, second only to their home. Couples can “horse trade” these assets. Such trading should be done after understanding each party’s long term needs, and after considering the tax consequences of taking one asset (such as an untaxed 401(k)), as opposed to another (such as a brokerage account in which post-tax dollars have been invested but whose individual assets may have built in capital gains or losses).
4. The Children
In most gray divorces, the children are either in their later teens or they are legally adults. For children for whom a custody agreement is still needed, a child specialist can help the parties craft such a plan without the nightmarish “custody battles” we all hear about. For adult children, if it’s important that the parties provide college or other support, the issue would be discussed and integrated into the overall settlement plan.
Gray divorces can be challenging, but know that you will make it through. Your collaborative divorce professionals are here to guide you.